Tom George was the sole owner of Turbine Component Super Market, LLC

(TCSM), when its existence was terminated by the state of Texas. A TCSM creditor, Turbine Resources Unlimited, filed and won a suit in a Texas state court against George for breach of contract. The plaintiff sought to collect the amount of the judgment through a sale of George’s property. Instead of turning his assets over to the court, however, George tried to hide them by reforming TCSM. Without telling the court, he paid an unrelated debt with $100,000 of TCSM’s funds. George claimed that the funds were a loan and that he was merely an employee of TCSM.

1. Is it more likely that the court will recognize TCSM as an LLC or a sole proprietorship? Why?

2. Using the Discussion step of the IDDR approach, consider whether the owner of a business has an ethical obligation to represent the character and purpose of the organization truthfully.